Filenews 30 May 2025
The competitive electricity market has not been extensively tested in smaller markets, such as Cyprus, and therefore "we will see along the way" whether the price of electricity will decrease, said the Minister of Energy, Trade and Industry, George Papanastasiou.
Asked if he believes that with the transition to the competitive electricity market there will be a reduction in the final price of electricity that reaches consumers, the Minister said that historically, in other, larger markets, usually when the competitive market starts, prices remain at the same levels and then, due to competition, a drop is created. "In a smaller market, which has not been tested often, we will see it along the way." In any case, he noted, the Ministry is entitled to intervene "if we see that things are going in the wrong direction".
CERA announced on Wednesday that the start of the commercial operation of the Competitive Electricity Market is set for September 15, 2025, while it has set October 1, 2025 as the first Trading Day.
"In order to arrive at yesterday's announcement by CERA, a lot of coordination work was carried out by the Ministry with the TSOA and CERA" in the past year and a half, the Minister said, as the TSO had to be staffed and the relevant legislation had to be passed.
He recalled that the trial period started in January 2025 and usually lasts six months, so it is expected to end in July 2025. "CERA has decided that it is not right to make the transition in the summer when demand is high, so it has been postponed to September", so that any minor problems that may arise can be better managed, he said.
Asked to explain what will change in practice with the introduction of the competitive electricity market, the Minister said that energy producers and suppliers are entering an environment, which is essentially a stock market, in which every half hour "you make quotes and buy electricity". In Cyprus, the CSE will be managed, while behind it, he said, will be a bank "with knowledge of the subject" as a general clearing member, in this case Eurobank Greece.
Then, suppliers, depending on how "good a price they get" will sell to consumers. Therefore, the Minister said, they are entering "into constant competition".
He said that there are already many companies in production and 6-7 suppliers. "I think that with yesterday's announcement by CERA, those who were ignorant or did not show interest, will think that if we are not inside when it starts, we will be outside."
Asked about this, he said that there are already suppliers beyond EAC, who so far do not choose to go to small consumers, but sell only to large consumers, such as factories, etc. The Minister estimated that with the opening of the competitive market, "there will also be interest for small consumers", who will be easy to switch from one company to another, ensuring a better price.
Referring to the Target Model adopted, in which the price base of electricity is the price base produced from the most expensive source, in order to create an environment in which renewables can invest, he said that in a competitive market, conventional electricity generation has a lot of role to play.
Even with the adoption of the storage of energy produced by renewables, "the need for conventional energy is not eliminated," he said, noting that suppliers will try to extend their purchases every half hour during the hours when there is production from renewables, but will also be forced to buy from conventional sources.
"While some hours you necessarily buy from the expensive one, you hope that most of the hours you buy from the other person who produces with another technology. This is where the penetration of renewables will also increase," he said, noting that these models work better if there is also an electrical interconnection. "In a single network, if there is not enough consumption, you would have an electrical interconnection to target consumers in another country."
Responding to what will apply to the rest of the charges that exist in the EAC tariffs, for consumers who choose to contract with another company, he said that the charges related to electricity production and network use will continue to apply. Asked to say what will happen with the fines for pollutants, he said that the pollutants will be borne by the producer. "EAC will have to show a writing sample, lower costs, reduce pollutants, in order to be a competitive producer of conventional electricity," he said.
CNA
